[Update 4:47PM: Oil's count would look better with yet another squiggle higher. It too may be wedging and with calls of $175 oil, sentiment is running high as it was back in 2008.]]
ORIGINAL POSTIts probably best to step back and look at the daily on the overall market. We have some potential clues so far (using the Wilshire 5000):
1. What we see is that proposed Intermediate wave (C) is still well within its up channel.
2. We have 3 waves down from price peak to the lower part of the up channel. That is corrective by EW standards.
3. If Minor 5 had ended in truncation, last week's rise back upwards does not fit well just yet with "price exhaustion" that a truncation is supposed to signal. So we must assume for now it was not a truncated 5.
4. Minor wave 2 and Minor wave 4 within (C) are both zigzag corrections which does not adhere to the guideline of alternation.
Taken altogether, therefore the logical conclusion is that the market is either working on a continued Minor 4 correction, best guess ascending triangle to get over resistance or working on Minor 5 up itself.
The bottom line? Got to let things continue to clarify until a clearer picture emerges. Sentiment is very bullish, or at least no one is willing to short this market. The VIX closed back inside its daily BB today so the trigger has been tripped for some short-term volatility. We have a huge gap up from last week that makes a nice first downside target.
Haven't given up on the idea of a huge wedge move in IYR: